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Brazilian steelmakers mulling rebar price hike of up to 8%

http://www.chemnet.com   May 03,2016 Platts
Brazilian steelmakers plan to increase rebar prices by up to 8% sometime between May and June, market sources said last week.

Platts assessed domestic 10 mm rebar for May at Real 1,600/mt ($465.30/mt) on Friday, unchanged month on month, based on a range of Real 1,550-1,650/mt ex-works, excluding taxes.

According to a producer source, the industry has reached its limit. "Prices were already very close to the breakeven point," he said.

Since the beginning of March, the steelmaking industry has been pressured by the currency exchange of the real against the US dollar and by an increase in international prices.

According to Brazilian Central bank data, the currency exchange has fallen from Real 3.99/$1 on March 1 to Real 3.45/$1 on April 29. In turn, the export price of rebar from Turkey, the major seller of rebar into Brazil, has increased to $452/mt in April from $363/mt in March.

"Demand seems to have stabilized in a very low level, but I can't tell if this is the bottom," a distributor in Brazil's Southeast said.

The distributor confirmed that he already received a new price list, which includes an increase of 8%. "However, it is hard to tell the amount of increase and when it will be valid, since discounts can be even larger than the increase," he added.

"I have not been informed of any increase in May," a construction company source said, adding that rebar sellers are foreseeing higher prices for June instead.

He said it will be very difficult for prices to go up. Besides poor market conditions, he noted that steel companies are fiercely competitive.

"Companies are conceding very competitive discounts in order to gain market share," he said. "I received a better offer and would have changed supplier if I didn't have a discount from the old one."
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